Cape Town – Finance Minister Enoch Godongwana's proposed Budget, featuring a contentious 0.5-percentage-point VAT increase, hangs in the balance as it enters the parliamentary arena, where the ANC no longer commands a majority. The political stakes are exceptionally high, with the stability of the Government of National Unity (GNU) and the country's economic future potentially on the line.
The ANC's primary partner in the GNU, the Democratic Alliance (DA), has firmly rejected the Budget, primarily due to the proposed tax increase. This leaves the ANC in a precarious position, forcing it to seek support from other parties both within and outside the GNU to secure the necessary votes for the Budget to pass.
DA leader John Steenhuisen minced no words, stating that his party had made it clear that it would oppose any increase in taxes, unless those increases were temporary. He accused the ANC of refusing to agree to a series of major reforms that would grow the economy, create jobs, reduce waste, and bring down taxes within three years.
"The ANC refused to agree to these measures, and instead insisted on two likely permanent VAT increases, which cumulatively will increase VAT by 1% over the next two years. As a consequence, the people of South Africa will be poorer, and the future of the government is at risk," Steenhuisen declared.
He further suggested that the ANC was struggling to adapt to the new political landscape following the recent election results. "The underlying problem is that the ANC has still not accepted the outcome of the general election and cannot bring itself to share power. It is deeply unfortunate that the ANC is prepared to sacrifice the South African people and risk the economic future of the country rather than accept it no longer has majority support," he said.
Steenhuisen reiterated that the DA had promised its voters that it would focus on economic growth and jobs and that it would not lend its vote to any Budget that did not have economic growth and jobs at its heart. Rejecting Godongwana's Budget was standing by that undertaking, he added.
According to the DA's finance spokesperson, Dr Mark Burke, the DA's proposals were not given any consideration in the Budget. "It is a pseudo Budget with very little support from across the political spectrum. One or two concessions is very much lip service," he said, adding that real reforms were needed.
The Inkatha Freedom Party (IFP), United Democratic Movement (UDM) and Patriotic Alliance (PA) have signalled their support for the budget. With the IFP, UDM and the PA's support, all is not lost for the ANC. The IFP has 17 MPs, PA nine and UDM three. This takes the 159-MP party to 188 – just 13 votes away from the magical 201 majority.
Speaking after delivering his speech, Godongwana admitted that it was tough in Cabinet when he presented the Budget. "There is some discussion among them (opposition parties). They have their own complaints about a whole range of issues which I think the different leaders are discussing."
He defended the difficult choices he had to make, stating: "In this Budget, we provide no relief on income tax and VAT. They have to make a choice – do we close schools, hospitals or clinics? They have to make that choice. Do we fire people? That is the choice we have to make and that is not a good choice to make."
President Cyril Ramaphosa also defended the "difficult decisions" his finance minister had to make.
"It took a lot of discussions, a lot of talking together with the various parties and, it came to this, and in the end, the minister was faced with a lot of challenges and difficulties on how to balance the Budget, particularly in the face of declining revenues but also, not wanting to cut spending and have austerity and he was faced with 17 000 teachers in KZN who need work."
Ramaphosa explained that faced with unemployed doctors and increasing pensions for older people, Godongwana had to juggle. "Every Minister of Finance always has to juggle and find a balance, and there are difficult choices that are often made, and he has made the difficult choices."
The president said it was for Parliament to discuss the Budget and come up with solutions. "They must now bring about solutions."
Asked what would happen if the Budget was blocked on 23 May, Ramaphosa said: "No, that is going to take a while for them to discuss and then we will face whatever happens then."
Gwede Mantashe, the ANC's chairperson, laid into the DA, accusing the party of politicking and using the National Health Insurance Act (NHI), Basic Education Laws Amendment (BELA) Act, and the Expropriation Act as bargaining tools during the three-week talks on the Budget.
"We have been engaging them for some time. They want to counter-oppose everything else on battles that they have lost. They want to counter-oppose the Budget to BELA Bill, NHI, and expropriation, and we said to them, 'We cannot counter-oppose political processes to a Budget.'
"The Budget is for a country to work, and we cannot succumb to the idea that they exchange political issues for the Budget."
Commenting on how the ANC would be able to garner enough support to pass the Budget, Mantashe said it would depend on the political parties in Parliament.
He predicted that the debate would split society in two: black and white, which he added should be avoided at all costs. "We should unify society, and if we want to polarise it, polarise it, but, the reality is that the Budget is not an ANC Budget, it is a Budget for the country."
Having been rejected by the DA, the ANC can't even turn to the MK Party for support. MKP parliamentary leader John Hlophe made it clear that his party would not support the Budget in its current form.
"We will definitely reject the Budget in its entirety, particularly as it relates to the VAT increase," Hlophe said.
Hlophe said the MKP supported other options, such as like a wealth tax and corporate tax. "There are many tycoons here who should be paying wealth tax," he said.
The party also supports capacitating the SA Revenue Service to strengthen revenue collection.
Attendance will be key on the days of the vote, as truancy from those who oppose the Budget may be costly. Voting on the fiscal framework and revenue proposals require the presence of at least a third of MPs (134) and a majority of the present MPs for the vote to carry.
With the Division of Revenue Bill which allocates funds to departments and to local government, and the Appropriation Bill, at least 201 MPs have to be in attendance for the vote to take place and the majority of people present to vote in support for them to be adopted by the House.
